As “nuclear” verdicts and MPL premiums rise, what’s in your control?
If you’re bothered by the growing cost of medical professional liability (MPL) insurance (and who isn’t?), here’s the situation—and what you can do about it.
- High-dollar (“nuclear”) verdicts in MPL cases are soaring.
- Hard market conditions persist, with insurers seeking rate increases in many situations.
- You can mitigate the impact of these costs by taking more control over your insurance renewal process.
170% Increase in Average MPL Paid Losses
In medical practice liability cases across the United States, “nuclear” verdicts are on the rise. Over 20 recent MPL verdicts exceeded $5 million, including three of more than $50 million.
And according to the National Practitioner Data Bank, the average per-defendant paid loss in MPL cases has increased 170% in the last 20 years, from about $150,000 to over $400,000.
The number of long-tail claims is also growing, adding to the difficult market conditions facing insurers.
Insurers’ combined ratios (claims and expenses paid vs. revenue from premiums) have deteriorated, averaging 105% to 115% across the U.S. (In New York State, the average combined ratio is more than 115%!)
10%–25% Increases in MPL Insurance Premiums Common
As a result, the MPL insurance market remains hard on buyers, with high premiums, high deductibles, and even denials of policy applications. Many insurers are applying stricter underwriting guidelines to manage the risk of litigation and high payouts.
According to a recent survey by Medical Liability Monitor, more than 10% of MPL policyholders had 2021–2022 rate increases of 10% to 25%.
And some states might push MPL premiums even higher.
A recent Pennsylvania State Supreme Court decision allowed venue shopping anywhere in the state. This ruling immediately increased the number of cases filed in higher-cost venues like Philadelphia. Predictably, so far in in 2023, MPL carriers in Pennsylvania have increased rates by 5% to 13%.
In New York, the Grieving Families Act (GFA) seeks to expand the MPL damages that plaintiffs can claim (and who can bring those claims). By some estimates, the GFA would increase MPL rates in the state by 20% or more.
The news isn’t all bad, however.
New York’s governor vetoed the GFA (though the bill is expected to re-emerge later in 2023).
The Medical Liability Monitor survey found that 27% of policyholders had rate increases of less than 10% in 2021–2022. And rate increases have moderated further in 2023.
The end of the COVID-19 pandemic has put some downward pressure on MPL insurance rates, as insurers ease concerns about related liability. Growing policy capacity has also helped keep rate increases in check, as some insurers loosen their MPL guidelines.
Steps You Can Take to Reduce Your MPL Insurance Costs
You should know when your MPL insurance renews and use a broker to help you with the renewal process. The key, high-level steps you should take include:
- Start the renewal process early—at least 90 days in advance, preferably 120. To position your organization to get the best deal, you need time to do the work.
- Collaborate with your broker to create a narrative that explains to insurers why your organization is a favorable risk. Selling your “story” is a critical—and often overlooked—way to minimize your MPL insurance costs.
- Pore over your MPL program structure and options with your broker. An expert broker can suggest ways to adjust deductibles, limits, settlement terms, tail options, and other policy variables to balance your costs and your risk.
For more details on these steps—and others actions you can take to manage MPL insurance costs—see our article, 6 Steps You Can Take to Reduce Your Insurance Costs.